LONDON, 3 October 2003 — Oil prices shot higher yesterday after Venezuela suggested another OPEC production cut was in the offing for the December meeting, while also calling for a higher target price band. The price of benchmark Brent North Sea crude oil for November delivery gained 48 cents to $28.36 here in late trading.
New York’s reference light sweet crude November contract won 45 cents to $29.84 a barrel in early deals.
Venezuelan Energy Minister Rafael Ramirez predicted a day earlier that the Organization of Petroleum Exporting Countries would cut production again when it meets on Dec. 4, having last week unexpectedly trimmed output by 3.5 percent.
Venezuelan President Hugo Chavez meanwhile suggested that OPEC’s target price band should be increased from $22-$28 per barrel to $25-$32. Ramirez said that the new price band might be discussed at an OPEC heads-of-state summit in 2005.
“If OPEC do decide to go down that route, then it can only be bullish because OPEC has demonstrated in the past three years their ability to keep prices within their band,” said Barclays Capital analyst Orrin Middleton. “So if they want to increase the target up to $25-$32, they would be able to achieve that.”
But an official at the organization’s headquarters in Vienna said that OPEC had no plans to increase its target band.
“The price range of $22-$28 is still in effect. I am not aware of any such debate” on a possible modification, the official told AFP on condition of anonymity.
Meanwhile, OPEC yesterday raised pressure on rival producers to join output restraint efforts even though prices seem too high for non-OPEC states to consider sharing the load. Venezuela will host Norway’s oil minister for market discussions later this month, a Norwegian ministry spokeswoman said yesterday. Norway’s Einar Steensnaes meets Ramirez on Oct. 28 after seeing non-OPEC Mexico’s Energy Minister Felipe Calderon on Oct. 24.
OPEC last week agreed to cut production by 3.5 percent from Nov. 1 to curb growth in consumer inventory stockpiles as rival production rises from Russia and West Africa.
The group, which controls around half the world’s oil trade, said it expected non-OPEC producers to join in if further cuts are needed. OPEC meets again on Dec. 4 to decide policy for the first quarter 2004.
